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International Monetary Fund, the fulcrum of world economic activity, enlightens us on the ever-changing world economic scene with its periodical reports. Its report on the above subject for July 2022 is reproduced below for expert’s reference. Let me explain in a simple way the present economic scene, otherwise.

 “Gloomy and more uncertain” is the expert cry from IMF. But we are all aware that the nuances are in the details:

  • A tentative recovery in economic activities could not be sustained in 2022 with the global output contracted in the second quarter of current year with the reasoning that China/Russia showed downturns, pandemic invariably brought more than expected inflation which has invited the central banks all over the world with tight monetary measures which would squeeze the purchasing power of the common man with meagre available capital for food, energy purchase or for other essential commodities for day to day living. Ukraine continues to be an enigma for millions of displaced immigrants with no hopes in the near future.
  • “The baseline forecast is for growth to slow from 6.1 percent last year to 3.2 percent in 2022, 0.4 percentage point lower than in the April 2022 World Economic Outlook. 1.4% less economic growth in USA, China coming with 1.1% lesser prediction for economic growth due to prolonged pandemic and other economic reasons. The current trends portray a never seen gloomy picture for China and its consequent effect on world economy.”
  • Tighter monetary policy and Ukraine combined with virtual stoppage of gas from Russia has affected Europe to move towards dangerous downturn of economy.

World economic outlook - July 2022 from IMF

  • What about inflation? In the words of IMF” Global inflation has been revised up due to food and energy prices as well as lingering supply-demand imbalances, and it is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies this year—upward revisions of 0.9 and 0.8 percentage point, respectively. In 2023, disinflationary monetary policy is expected to bite, with global output growing by just 2.9 percent.”
  • World economic growth will descend down to 2.6% and 2.0% in 2022 and 2023 respectively if the inflation shows further increase, either Russia totally stops gas supply to Europe or Europe bites the feel of total stoppage of gas import from it, tighter monetary policies of central banks harden the availability of liquidity, the world economic growth would rank among the bottom 10% of outcomes since 1970, 50 years unexpected slide.
  • Inflation with its actual growth in USA and UK with 9.1, perhaps the highest in 40 years is really baffling. Euro area showed 8.6% growth with 9.8% inflation in emerging markets do project a gloomy picture. This has projected the central banks of developed nations/developing nations to tighten the monetary policies.
  • China with its unassimilated economic scene: COVID 19 restrictions on movement of men and materials grossly affected the economic scene. Let us hear IMF statement on China. “Shanghai, a major global supply chain hub, entered a strict lockdown in April 2022, forcing citywide economic activity to halt for about eight weeks. In the second quarter, real GDP contracted significantly by 2.6 percent on a sequential basis, driven by lower consumption—the sharpest decline since the first quarter of 2020, at the onset of the pandemic, when it declined by 10.3 percent.” On an expected level, the requirement from its goods and services showing contraction, China is struggling to project a gloomy picture in decades of its continued growth.

How have the nations performed with their economic growth under the stressing situations?

Latest World Economic Outlook Growth Projections July 2022


There has been a sudden fall in projected GDP among the nations during 2022 and 2023. While the whole world has shown an inclination towards a downfall, India has somehow indicated a saving grace of a growth of 6.1 in 2023 from 7.4 in 2022.

What about bond yields?

Rising real rates have resulted in higher bond yields in advanced countries while lower market-based measures of inflation expectations have helped to lower some of them.

What are the sectors showing sharp decline in equity markets?

  • Consumer discretionary and information technology
  • European market in a decline/Japanese market due to weaker yen and accommodative monetary policies in supporting the equity market.
  • What about IMF prescriptions of mid – 2022 vaccination target of 70%? No, the target was not met.

What are the prescriptions as suggested by IMF to tackle the current incoherent economic scene?

Tightening of money supply to stabilize the price increase, taking steps to provide food grains to less developed economies who now feel the pinch of non- availability of even foodgrains to sustain living, recovery of Chinese pandemic levels, and normalcy in supply chains to improve movement of goods

What are the SDR of 122,642.5 amounting to US$170,570.29 Million going to help and for whom due to COVID 19 and sudden gloomy international scene? All from IMF, of course.

Asia and Pacific – SDR 1890.02 US $ 2622.78 Million

Europe – SDR – 4819.1 US $ 6676

Middle East and Central Asia SDR 12312 US $ 17021

Sub Saharan Africa SDR 18551 US$25934

Western Hemisphere SDR 85069 US $ 118,315 Million.

Debt Relief total: SDR 689 US $ 965.

Now, let us discuss India and its neighbors.

India on an emergency scale extended billions of dollars to Sri Lanka, the worst affected, Bangla Dash, a substantial line of credit to meet the liquidity needs and Myanmar its frequent monetary needs on a consistent basis.

Pakistan and Bangla Dash approached IMF for their needs among others.

Overall, IMF is making available nearly $ 250 billion to meet the requirements of its member countries.

What about India and its wherewithal after COVID 19 and economic upheaval?

Both Indian government with nearly 220 Crores of vaccine for its population and liberal food/financial assistance to its population, and the regulatory authorities like RBI/SEBI and others worked overtime to provide the required liquidity. Recent stepping up of monetary rates in tune with the central banks of the world was to contain inflation which has raised its ugly head again affecting vast sections of population who are trying to raise their heads after the horrific COVID 19.

Surprisingly, the whole world expects India to produce miracles and achieve great economic performance to enhance the global economic growth.

My observations

Beyond anyone’s calculations, India achieved the unique vaccination to its huge population almost at free of cost, enabled the poor to get at least food grains and other necessities almost free of cost for its poorer section of the population, and the Central government schemes to help the poor are reaching the nook and corner of the nation. Share market has shown vicissitudes of its movements unravelling unknown potential of money making for risk taking equity or debt holders. With many Indians ranking among the richest of the world due to heavy capitalization of their companies is a breather to the vast masses with the message that India has one of its brightest innings yet to convene to meet the national goals.

I am extremely happy to conclude my discussions on a happier frame of mind.


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May 2024